Making work better: What can government do?

It’s not a great time to be an optimist. Austerity has left many of our public services on their knees. The vast majority of people have seen their real incomes plummet. And, the political debate is being dominated by scaremongering over Europe and immigration. Yet the long shadow of the financial crash has brought into stark relief some of the structural problems in our labour market and opened up a long overdue discussion about what has happened to the world of work.

The voters may credit the government for job creation (although unemployment is still above pre-recession levels), but they are rightly asking why do wages keep falling while pay at the top keeps rising? Why are there more than 5 million people paid below the living wage, which is costing taxpayers billions in in-work benefits? Why do we have so many skilled people working in low skilled, low paid employment? Why is job insecurity and unfair treatment at work so pernicious? And, why is the gap between Britain’s good and bad employers getting wider by the day and creating a two-tier workforce? Many of these questions pre-date the recession, but answering them may help win the 2015 election.

Offering progressive policies to help make work better for the country’s 30 million workers may prove to be the missing link in the political battle to persuade people that “things can only get better”. However, as trade unions know, there is no silver bullet to solving all the problems at work – especially in vulnerable workplaces where there is no collective bargaining and little employment protection. There is of course a nervousness among many of the big corporates about challenging the power imbalance in the workplace. Needless to say, the government also has little appetite for any significant change and some Ministers are advocating further labour market deregulation and attacking the role of unions.

In our new report, Making Work Better: An Agenda for Government, Ed Sweeney, former chair of Acas, sets out the low base we are starting from. The 100-page report, which was welcomed by the Labour Party, unions and some employers’ organisations, showed that problems at work affect the majority of employees, and is not confined to precarious and exploitative workplaces. A survey (conducted with the TUC) for the report, for example, highlights many of the troubles at work. The vast majority of those surveyed felt that their pay had not kept up with increases in the cost of living – as the TUC has documented you have to go back to 1800s since we have seen such a slump in wages. But the problems are much wider than pay and extend far beyond those at the bottom end of the labour market. The polling also showed that 40% feel they have no real say in how their work is organised and are neither consulted or involved in management decisions. Nearly half said their job does not make full use of their skills and abilities and over half have recently felt anxious or worried about work.

Other similar studies quoted in the report have also shown that the majority of workers have experienced some form of mistreatment and many are worried about the loss of job status. Much of the discussion in the open forums from around the country that fed into the report also showed that there is as much unease and discontentment among white collar workers as there is among blue collar. Indeed, while most employees said they were loyal to their organisation and understood the need for belt tightening in difficult times, people felt they were not getting a fair deal and that their grievances were all too often ignored. As one participant put it:

“we are over-worked and over-managed, and our voice alone could become like a radio with employers able to turn the volume down if they didn’t like what they heard”.

The report demonstrates that concerns at work are not just an issue for employees. Britain’s broken workplaces also undermine our productivity, which is 30% higher in France and Germany (countries which incidentally have more worker protection and stronger social partnership than us). Too often the policy response to our productivity problem is to focus solely on skills and R&D rather than what goes on within the workplace. Throughout the consultation for the report we heard workers feeling ignored, disengaged and unfulfilled. Hardly ingredients for boosting performance. In many instances in both the public and private sector the problems centred on poor management and a weak HR presence (interestingly evidence cited in the report suggests that the HR profession has itself been sidelined by an preoccupation with short-term financial performance). The sentiment from many employees and some employers – was that Britain still suffered from a top-down culture of “bosses know best”, “us and them” view of the world. The research in the report shows that this not only stifles productivity and innovation, but leaves talent unfulfilled and creates mistrust between employee and employer.

To tackle the long tail of poor performing workplaces and engender a shift in attitudes and behaviour the report calls for a step change in employment standards, a commitment to fair pay, more effective employment protection, and stronger voice at work. The report argues that an inclusive labour market and employee involvement is good for productivity, and that low paid, low skilled jobs in low value added businesses is not going to put us on the road to sustained recovery.

The UK now has the real opportunity to break with the recent past and exit the low road of wage inequality and poor treatment. To do so the report makes the case for ‘workplace citizenship’, which chimes with people’s sense that they should not surrender their rights as citizens at the point at which they cross their employer’s threshold. As the report makes clear work gives people meaning; productive work is achieved by colleagues working together; success requires workers at all levels having a say over their work; and fair rewards and security requires better balanced power relationships at work. It also identified a genuine desire by workers to be heard and engaged, both individually and collectively.

Government itself can do much to promote workplace citizenship and good work. The report advocates a programme of achievable reforms which could be easily enacted in a new employment bill. For example, government can become a Living Wage employer and use its power of procurement to lift people out of poverty by introducing pay Living Wage Contracts. It can, if it chooses, support the work of trade unions and give Acas the power to promote collective bargaining. It can also take a far more ambitious approach to the Information and Consultation Regulations to lower thresholds and help give employees a stronger collective voice. It can insist upon greater transparency by obliging public companies to disclose pay ratios and other employment information. It can bring in tougher regulations to curtail the abuse of zero hours contracts and bad agency work. Reform of fees for employment tribunal system would go some way to ensure that at least cost is not a barrier to justice, and it can also improve and invest in better enforcement regimes for both the minimum wage and equal opportunities. Legislation can reverse the trend towards a two tier workforce when services are contracted out and extending childcare and improving eldercare could help narrow the gender pay gap. Government could also support management training and set higher management standards as well as help spread best practice in employment reporting and codes of conduct set by local council.

These are just some of the steps government could make. They are also measures which could support the resurgence of trade unionism and improve national productivity. Building new workplace institutions that help deliver workplace citizenship, good work and fair pay will rely on the work of the social partners. But government needs to take a lead. The party that can convince voters that it has a plan to do just that may find support from an electorate that is open to ideas for making work better.

Paul Hunter is head of research at the Smith Institute. Paul's interests include poverty, the labour market, economic geography and housing. He was a lead researcher for the inquiry into Making Work Better and has recently written reports on: poverty…